Elijah has a utility function U(c1, c2) = min{c1, c2}, where cl and c2 are his consumption in periods 1 and 2 respectively. Elijah earns £190 in period 1 and he will earn £70 in period 2. Elijah can borrow or lend at an interest rate of 5%. There is no inflation. Select one: O a. Elijah will save about £58.53. O b. Elijah will save about £61.46. O c. None of the above. O d. Elijah will neither borrow nor lend. O e. Elijah will borrow about £58.53.

Elijah has a utility function U(c1, c2) = min{c1, c2}, where cl and c2 are his consumption in periods 1 and 2 respectively. Elijah earns £190 in period 1 and he will earn £70 in period 2. Elijah can borrow or lend at an interest rate of 5%. There is no inflation. Select one: O a. Elijah will save about £58.53. O b. Elijah will save about £61.46. O c. None of the above. O d. Elijah will neither borrow nor lend. O e. Elijah will borrow about £58.53.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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